IT Manpower the Biggest Challenge: Andersen

Businesses have to pay more attention to intangibles which can contribute up to 80 percent of their market value, said Richard Boulton, worldwide managing partner, Business Consulting, for Arthur Andersen LLP.

Speaking at a press conference during a visit to Singapore recently, Boulton said the New Economy is not just about economic statistics like productivity.

"People concentrate too much on statistics and technology, but a lot of what is changing is broader than that. The biggest challenge in the next decade will be the shortage of manpower," he said.

This is being fueled not just by the Internet or the emergence of dot-coms, but is a structural factor that comes out of demand for people and the smaller number of young people entering the workforce, said Boulton.

"Companies tend to gear their efforts around tangible assets and ignore the need for real investments in training, hiring and customer relationship management. They tend to treat these as one-year items, part of the operating plan for a year, and these are often things that people cut when times are tough."

And yet, Boulton added, most wealth is created from intangibles.

"About 20 percent of market value is book value; the rest is from intangibles such as relationships with customers, employees and suppliers," said Boulton. Such intangibles, especially the need to establish and strengthen relationships, are shaping up as key drivers for the next phase of computing. In the 1980s, the focus was on automation, and computing efforts revolved around systems integration in a mainframe environment. In the 1990s, it was business integration, and the mantra was "to align strategies with processes and people."

Looking ahead, Boulton said the emphasis for the next 10 years will be on market integration. The challenge will be to integrate internal operations with external investors, suppliers and buyers using the Web as a platform, and this will lead to a wave of enterprise integration portals which will enable corporate information to be presented to external parties, he said.

Boulton described Singapore as being at the forefront of this evolution. Currently, more than half of Arthur Andersen's work here is in solutions which integrate enterprises with the outside market, he said.

Arthur Andersen's business consulting practice, which was started in 1995, is estimated to be worth US$2 billion this year. Asia is the fastest growing area, chalking up 60 percent growth last year. Most of this business came from established companies which are aiming to take advantage of technology to grow and to link up with their partners, said Boulton.

"In today's environment, no one has the skills to do everything in-house," he said, quoting studies which showed that 73 percent of businesses will seek outside Internet consultants. However, 61 percent of the respondents said they were not sure who they would use.

"Compared to five years ago when people went for established names, the consulting market today is wide open," said Boulton.

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